Monday, March 22, 2010

In which we take a good look at the Chicago Public Schools budget deficit, and the plans to rectify it.

So I had a bunch of questions after I saw Chicago Public Schools CEO Ron Hubermann's PowerPoint presentation on the budget crisis (which, by the way, ranks among the best of my gifted 10-12-year-olds in terms of professionalism). Here are some of them, along with the answers I've been able to piece together so far:

1. Aren't maximum class sizes set in the CTU contract?

Yes -- in section 28-1. But if you look at subsection VII, there's this great bit of fuck-you:
Prior to Board adoption of any amendments to this policy altering the class size provisions contained herein, notice and an opportunity to meet and confer regarding alterations will be provided to the Chicago Teachers Union at least 45 days prior to implementation.
We get to talk about it for a few days before you ratchet up our class sizes to 37? How fucking sweet of you.

This might seem like a totally bizarre sort of provision to find in a union contract -- it seemed that way to me, too. It turns out that class size is what's called a "permissive" subject of negotiation, as described in the Illinois Employment Labor Relations Act, section 4.5(b):
The subject or matters described in subsection (a) [contracting teaching duties to third parties, laying off teachers, setting class sizes, schedules, and calendars, and creating and staffing experimental programs related to educational use of technology] are permissive subjects of bargaining between an educational employer and an exclusive representative of its employees and, for the purpose of this Act, are within the sole discretion of the educational employer to decide to bargain, provided that the educational employer is required to bargain over the impact of a decision concerning such subject or matter on the bargaining unit upon request by the exclusive representative. During this bargaining, the educational employer shall not be precluded from implementing its decision. If, after a reasonable period of bargaining, a dispute or impasse exists between the educational employer and the exclusive representative, the dispute or impasse shall be resolved exclusively as set forth in subsection (b) of Section 12 of this Act in lieu of a strike under Section 13 of this Act.
[By the way, subsection 12(b) is about mediation.]

So basically, the union's right to set binding standards about these subjects is severely restricted under the law (we can't strike over these issues, and we can only include them in negotiations if they let us), and bargained away even further in our contract (we don't even require them to submit to mediation).

2. How does laying off 2300 teachers save $160 million?

Here's the thing: laid-off teachers go into the cadre substitute pool, which means that they work every day (even if there aren't enough teachers out to justify it) and still get benefits, and their salary cut is about $20,000 at the outside. That means, in terms of the savings on those teachers' salaries, you're looking at a total of less than $50 million.

The real savings come, not at the expense of those laid-off teachers, but at the expense of those of us who were laid off last year, who won't be getting new jobs, won't be working, and won't be getting our benefits renewed. Chicago Public Schools keeps a structural unemployment level of about 4% -- people who are certified to teach, want teaching jobs, but have been laid off and are working as substitutes with benefits. The people who are in that category this year almost certainly won't get new jobs, will lose their health insurance, and will almost never work, because it will be very rare for 2300 teachers to call in sick in a district with less than 25,000 teachers left.

3. Where does this come from?

Hubermann's presentation does a great job of outsourcing blame as much as possible: the first thing he points to in explaining a $700-million budget deficit is a $68-million decrease in state funding. There's also a $138-million decrease in local revenue, a $279-million increase in the district's pension obligation, $169 million in increased teacher compensation, and $133 million in increased operational and construction expenses.

Portraying the increases in operational and construction expenses as anything other than voluntary -- without giving any details on where these increases are coming from -- seems to me to be mostly nonsense. Given that they're using a whole bunch of resources closing old schools and opening new ones, it seems like that number ought to be negotiable. More research on this is needed, ideally from someone who has more time for investigative journalism than I do (I'd like to suggest the pros do it, but I know how good the odds are of something like that coming out of the mainstream Chicago press).

The increase in teacher compensation is entirely predictable: teacher raises are written into the contract, and health care costs and increases in average seniority have been going on for quite some time.

In order to talk about decreases in local revenue, we need to talk about tax increment financing, the system whereby property tax revenue gets diverted from local government institutions such as the school board and into the pockets of developers. Since the purpose of tax increment financing is to combat blight, and since it's clear shitty schools have a lot to do with driving people (and by extension, businesses) away from neighborhoods, it seems like there's a reasonable case to be made that we should shovel some TIF money into the schools.

Then there are state budget cuts, which, I suppose, we just have to accept for now.

And there's the pension obligations. The Chicago Public Schools contribution to the teachers' pension fund is determined by the assets-to-liabilities ratio of the pension fund itself -- the idea is that the Chicago Public Schools are responsible for putting in enough money to make sure the pension's assets-to-liabilities ratio reaches 90% (the widely-accepted minimum for soundness of a pension fund) by 2045.

This amount had already been increased by a combination of increases in promised benefits over the years (which increase the amount of unfunded liabilities to be covered by 2045), and state government failures to live up to its commitment. According to a Civic Federation report, the General Assembly declared its "goal and intention" of putting 20% to 30% as much money into the Chicago Teachers' Pension Fund as it did into the downstate teachers' fund (which makes sense given population figures), but actually less than 2% of its teachers' pension contributions are to CTPF -- a difference between about $32.5 million in FY 2010 and $482 million in FY 2010. Partly, this has to do with the mismanagement of the downstate teachers' pension fund, which put it in a much more desperate situation.

Add to this the effect of the stock market crash, and you see preposterously large requirements on CPS, in order to meet the goal of 90% funding by 2045.

4. What is to be done?

No one's being reasonable here. In the short term, regardless of the principles involved, we need to be teaching kids, and in the long term, we need to not be alienating newer teachers.

To be fair, it seems like some of what's going on here is posturing: CTU president Marilyn Stewart has dismissed Hubermann's presentation as "threatening rhetoric," saying negotiations are going on behind the scenes to resolve the issue. It seems like Hubermann's intentionally painting a doomsday scenario to push the union into concessions, and like the CTU's "no concessions" stance probably won't hold up. But for the moment, let's assume they're serious.

By refusing to compromise on the contract, the CTU isn't protecting teachers. Teachers are still taking a huge hit -- it's just that the hit is in the form of job losses, which disproportionately affect young teachers, rather than salary and benefit compromises, which disproportionately affect old teachers. This is why those of us who are young and idealistic are suspicious of the union: it consistently, whether in these debates or in the debates over tenure and incentive pay, prioritizes the desires of old, shitty teachers.

The cost of living adjustment should be waived this year. The cost of living hasn't actually increased, so we can live without 4% raises. Everyone else is doing it. I sympathize with the idea that this sets a precedent for continued concessions on the part of the union, which is why we should demand in return some fiscal responsibility from the schools (in the form of a Renaissance 2010 moratorium), the city (in the form of the diversion of TIF money from developers and corporations to the schools), and the state (in the form of an increase in the income tax -- and, ideally, the abandonment of the two-bracket tax system -- and demands that they make and keep realistic commitments to the pension fund).

The pension problem isn't going away. Most of the pension funds in the area, according to that Civic Federation report, are fucked even worse than the CTPF is. Asking the state for pension relief only makes sense if you believe the pension fund is going to rebound massively when (if) the economy recovers; otherwise, we're going to be stuck with even more massive deficits over the next few years, and even more demands for union concessions. We need to figure out what a reasonable, sustainable approach to teacher pensions is, and figure out ways to fund it.

And we need to involve parents and children in this process. As it stands, the biggest cuts are in places that hit parents and students directly. If these negotiations are only between CTU and the Board, we're leaving out the vast majority of the stakeholders.

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